Luxury chains ride travel boom, eye new horizons

* Luxury travel retail seen up 25 pct by 2014- Generation
Research

* Estée Lauder opening in domestic airports in China

* Tiffany, Hublot, Brookstone among those opening new stores

By Phil Wahba

July 4 (Reuters) - A rising class of affluent globe-trotters
from China, Russia and Brazil is spurring retailers to expand
their presence in high-end airports from the United States to
Germany to China.

Travel retail has long been a fixture for brands like Estée
Lauder Cos Inc and LVMH's Louis Vuitton. But
sales at airports and other travel venues have risen far more
quickly in recent years than at regular stores for many chains,
putting this area of retailing front and center in many
companies' expansion plans.

Chains with few such stores are adding new ones: Tiffany &
Co is set to open a second store in Singapore's Changi
this year and one at Berlin's new airport next year, bringing
the jeweler's total to eight, while Swiss luxury watchmaker
Hublot, which is also part of LVMH, is eyeing Frankfurt's
airport.

Meanwhile, Estée Lauder Cos, with nearly 1,000 airport
stores across its myriad brands of beauty products, is branching
out to domestic airports in smaller cities in China and Brazil
to find new growth in the travel business and scouting places
that could one day be China's top vacation spots.

"It is the moment to ask ourselves, what is the St-Tropez of
China?" Chief Executive Officer Fabrizio Freda said in a recent
interview. Travel retail sales growth at the company has
outpaced its overall growth.

Worldwide, duty-free and travel retail sales of perfumes,
cosmetics and luxury goods jumped 28.3 percent between 2008 and
2011, according Generation Research. The Swedish data firm
expects them to jump 25 percent to $44.5 billion by 2014 from
its projection for 2012.

China's emerging middle class has been the single largest
motor of luxury's growth in the last few years.

According to the Global Business Travel Association, there
are plans in place for 100 new airports in China in the next
decade. So called second-tier cities like Chongqing and Wuhan
are emerging as major centers and attracting retailers' notice.

Spending thousands at an airport on a designer handbag is
much more of a habit for shoppers from China and other emerging
markets than for Westerners.

"The Chinese love buying when they travel-- it's a culture,"
said Hublot Chairman Jean-Claude Biver, noting how much those
shoppers boost sales at its airport stores in Switzerland.

Even in the United States, where airports are generally seen
as shabby compared with Europe and Asia's sleek venues, there is
interest in opening stores when facilities are up to standard.

Estée Lauder Co's M.A.C. and Brookstone Inc were
among the brands to open stores at the splashy $1.4 billion
international terminal in Atlanta that opened in May.

Chris Anderson, Brookstone's director and general manager of
airport retail, said he would gladly open many more under the
right conditions, given how they serve as a billboard for the
chain.

But for many, U.S. airports are generally not up to snuff,
hampering the potential there.

"When I look at American airports, there is just no sense of
trying to create in many of them a nice store," Samsonite
International S.A. CEO Tim Parker said.

Olivier Bottrie, president of travel retail worldwide for
Estée Lauder Cos, and other industry executives recognized the
threat of a global economic crisis, but pointed to travel's
quick recovery after shocks like 9/11 and the 2003 SARS
epidemic.

"It is an area that is growing in terms of traffic and
therefore in terms of sales potential," Bottrie said.